Europe, U.S. to resume free trade talks despite tension

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The American flag flies on top of the U.S. embassy in front of the Reichstag building that houses the German Parliament, Bundestag, in Berlin.

BRUSSELS (AP) - The United States and the European Union will resume free trade negotiations next week despite heightened tension between the two over the alleged spying activities of the U.S. National Security Agency.

The second round of the trans-Atlantic talks will have to make up ground lost when a previous session was canceled because of the partial shutdown of the U.S. government.

The European Commission, the 28-nation bloc's executive arm, said Monday that the talks will go ahead and that next week's round in Brussels is set to focus on services, investment, energy and regulatory issues.

A broad EU-US trade deal could provide a boost to growth and jobs on both sides of the Atlantic by eliminating tariffs and regulatory barriers that are hampering business. The trade volume in goods and services between the two economies - representing almost half of global output - totaled 800 billion euros ($1.08 trillion) last year.

The discussions are taking place under a cloud following revelations over the NSA's alleged spying activities including eavesdropping on German Chancellor Angela Merkel's phone. Some top European lawmakers have called for the talks to be suspended.

"It's out of question to mix the two things - the negotiations on an investment and trade agreement with the United States and the measures the (EU) member states would like to adopt to fight against spying," Commission spokesman Olivier Bailly insisted.

While data protection and online privacy rights aren't officially on the agenda of the talks, top EU officials have made it clear that they will push for tougher rules in the U.S. in parallel to the trade negotiations.

The talks were initially scheduled for early October, but Washington canceled them at the last minute as many of the 100 or so U.S. officials would not have been able to attend because of the government shutdown. The third round of talks will take place in Washington late next month.

Both sides hope to reach a broad agreement by the end of 2014, but that schedule is considered highly ambitious as significant hurdles remain on issues like agriculture, industry regulation and other fields.

A study commissioned by the EU estimates that a successful conclusion of the wide-ranging talks would add about 120 billion ($160 billion) to the 28-nation bloc's annual gross domestic product and 95 billion euros ($130 billion) to U.S. output.